GRAND FARMS, INC. and PHILIPPINE SHARES CORP. v.

CA [RTC presiding judge, RTC clerk of court, & deputy sheriff-in-charge] (BANCO FILIPINO SAVINGS AND MORTGAGE BANK) 193 SCRA 748 REGALADO; Feb. 7, 1991
NATURE Appeal from the decision of CA, which found no grave abuse of discretion on the part of respondent judge in denying petitioners' motion for summary judgment FACTS - Petitioners filed Civil Case No. 2816-V-88 in the Regional Trial Court of Valenzuela, Metro Manila for annulment and/or declaration of nullity of the extrajudicial foreclosure proceedings over their mortgaged properties, with damages, against respondents clerk of court, deputy sheriff and herein private respondent Banco Filipino Savings and Mortgage Bank. - After the bank filed its answer, petitioners requested an admission by the bank that no formal notice of intention to foreclose the real estate mortgage was sent by the bank to petitioners. - The bank responded and said that petitioners were notified of the auction sale by the posting of notices and the publication of notice in the Metropolitan Newsweek, a newspaper of general circulation in the province where the subject properties are located and in the Philippines. - On the basis of implied admission that no formal notice was served personally, petitioners filed a motion for summary judgment contending that the foreclosure was violative of the provisions of the mortgage contract, specifically paragraph (k) thereof which provides: "k) All correspondence relative to this Mortgage, including demand letters, summons, subpoena or notifications of any judicial or extrajudical actions shall be sent to the Mortgagor at the address given above or at the address that may hereafter be given in writing by the Mortgagor to the Mortgagee, and the mere act of sending any correspondence by mail or by personal delivery to the said address shall be valid and effective notice to the Mortgagor for all legal purposes, and the fact that any communication is not actually received by the Mortgagor, or that it has been returned unclaimed to the Mortgagee, or that no person was found at the address given, or that the address is fictitious, or cannot be located, shall not excuse or relieve the Mortgagor from the effects of such notice;" - The bank opposed the motion saying that based on other paragraphs (b and d) in the contract, the mortgagor authorized extra-judicial sale upon breach of contract and that the mortgagee was appointed atty-in-fact with full powers upon any breach of the obligations in the contract. - The RTC issued an order denying petitioners' motion for summary judgment. MFR was also denied on the ground that genuine and substantial issues exist which require the presentation of evidence during the trial. - Petitioners filed a petition for certiorari to CA attacking said orders of denial as having been issued with grave abuse of discretion. CA dismissed the petition, holding that no personal notice was required to foreclose since private respondent was constituted by petitioners as their attorney-in-fact to sell the mortgaged property. It further held that paragraph (k) of the mortgage contract merely specified the address where correspondence should be sent and did not impose an additional condition on the part of private respondent to notify petitioners personally of the foreclosure. CA also denied petitioners MFR. ISSUES WON summary judgment was proper HELD YES. Ratio The Rules of Court authorize the rendition of a summary judgment if the pleadings, depositions and admissions on file, together with the affidavits, show that, except as to the amount of damages, there is no issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Although an issue may be raised formally by the pleadings but there is no genuine issue of fact, and all the facts are within the judicial knowledge of the court, summary judgment may be granted. The real test, therefore, of a motion for summary judgment is whether the pleadings, affidavits and exhibits in support of the motion are sufficient to overcome the opposing papers and to justify a finding as a matter of law that there is no defense to the action or that the claim is clearly meritorious. Reasoning Private respondent tacitly admitted in its answer to petitioners' request for admission that it did not send any formal notice of foreclosure to petitioners. Stated otherwise, and as is evident from the records, there has been no denial by private respondent that no personal notice of the extrajudicial foreclosure was ever sent to petitioners prior thereto. This omission, by itself, rendered the foreclosure defective and irregular for being contrary to the express provisions of the mortgage contract. There is thus no further necessity to inquire into the other issues cited by the trial court, for the foreclosure may be annulled solely on the basis of such defect. - In Community Savings & Loan Association, Inc., et al. vs. Court of Appeals, at al., the SC held that the stipulation is the law between [the parties] and as it not contrary to law, morals, good customs and public policy, the same should be complied with faithfully (Art. 1306 CC). Thus, while publication of the foreclosure proceedings in the newspaper of general circulation was complied with, personal notice is still required, when the same was mutually agreed upon by the parties as additional condition of the mortgage contract. Failure to comply with this additional

stipulation would render illusory Art. 1306. And as the record is bereft of any evidence which even impliedly indicate that the required notice of the extrajudicial foreclosure was ever sent to the debtor-mortgagor, the extrajudicial foreclosure proceedings on the property in question are fatally defective and are not binding on the debtor-mortgagor. - To still require a trial notwithstanding private respondent's admission of the lack of such requisite notice would be a superfluity and would work injustice to petitioners whose obtention of the relief to which they are plainly and patently entitled would be further delayed. That undesirable contingency is obviously one of the reasons why our procedural rules have provided for summary judgments. Disposition The decision appealed from is hereby REVERSED and SET ASIDE and this case is REMANDED to the court of origin for further proceedings in conformity with this decision.